Market Trends

Ruminating About the Medium-Duty Truck Market

As we approach the start of a new year, it is inevitable that we take a look at where we’ve been and where we are going. The medium-duty truck market has evolved tremendously in the past 40 years. Pre-1970, the medium-duty truck market was comprised solely of straight trucks, but since then product options have proliferated.

Starting in the 1970s, GM, Ford, and Chrysler introduced the first van cutaway models, which were popular with second stage manufacturers (body builders) developing specialized fleet vehicle applications. Cutaways quickly became a popular chassis for delivery fleets, ambulances, shuttle buses, school buses, and recreational vehicles. However, straight trucks continued to be the predominant medium-duty chassis.

In 1977, Iveco, a business unit of Fiat, entered the U.S. market with the first-ever cab-over engine medium-duty truck model. Although cab-over engine trucks had been used for many years in the heavy-duty truck market, Iveco’s truck was the first introduction into the medium-duty market. Iveco entered the U.S. market selling Magirus trucks (Class 6 and 7). In 1979, Iveco debuted its Z vans (Class 3-5) equipped with the Iveco Z-100 (five-cylinder air-cooled Deutz engine).

In the 1980s, the cab-over engine-market proliferated as Japanese OEMs entered the U.S. commercial fleet and vocational markets. Isuzu was the first to enter the U.S. market in 1984 with its N-Series low-cab forward model. Isuzu was soon followed by product offerings from UD Nissan, Hino, and Mitsubishi Fuso.

The 1980s and 1990s were a tumultuous time for medium-duty OEMs and the era witnessed dramatic consolidation. In 1986, GM sold its large truck business to Volvo Trucks. Later, GM sold its P-chassis business, primarily used for stepvan applications, to Spartan. GM’s medium-duty product line also consisted of rebadged Isuzu NPR product, which were sold in the medium-duty market as the Chevrolet and GMC W-Series. Ultimately, this product sharing agreement ended. In 1991, Iveco exited the U.S. market due to heavy competition from Japanese brands. Ford Motor Co. sold its heavy-duty/medium-duty chassis business in 1997 to Daimler, which rebranded the business as Sterling. In addition to Class 8 tractors, Sterling built a range of medium-duty cab/chassis vehicles, with bodies added by third-party upfitters/body builders for vocational applications, such as construction, snow plowing, and refuse. In 2008, Daimler discontinued the Sterling product brand.

In the 2000s, heavy-duty OEMs, such as Freightliner, Kenworth, and Peterbilt, began migrating into the medium-duty market. Likewise, there was a migration upmarket by light-duty OEMs, such as Dodge and Ford.

Where Do We Go from Here?

Today, a key trend in vehicle and equipment specifications is lightweighting. Driven by fuel economy requirements, OEMs are specifying lighter-weight equipment to increase fuel economy, while still being able to fulfill the fleet application. All OEMs are enhancing powertrain options to increase fuel-economy ratings and lower emissions, which is being driven by fleet customers. Fleets are downsizing to the smallest displacement powertrains possible that still meets their application needs.

Similarly, truck fleets are employing a variety of other strategies to cut fuel costs, such as lightweight upfitting, spec’ing reduced rolling resistance tires, using synthetic oils, selecting aerodynamic add-ons, and reducing idle time. There is also increased use of engine governors in medium-duty trucks to increase fuel economy and reduce a company’s carbon footprint. In terms of preventive maintenance, there is a transition to lighter-weight synthetic oils to extend drain intervals, enhance fuel mileage, and reduce engine sludge. Another trend is increased use of re-refined lubricants to reduce costs and enhance the fleet’s “green” image.

Another trend is manufacturers offering more safety features on light-duty base-trim levels previously only offered on higher-trim levels. Examples include back-up cameras and reverse sensing systems. In recent years, a variety of new technologies have been offered on medium-duty trucks, such as APUs, emission system, electronics, more complex transmissions, etc. Similarly, there is a shift to LED lighting, which has less of an electrical current draw on electrical components and longer life lights. One ongoing specification trend is the transition from manual transmissions to automatics and automated-manual transmissions, which has been driven by the driver shortage and the fact that many younger drivers do not know how to operate a manual.

Also, some fleets downsize to a smaller truck to avoid the CDL requirement, since there is an ongoing shortage of CDL-credentialed drivers. Rightsizing is another ongoing trend as more fleets are migrating to a smaller truck class that still meets payload and GVW requirements. Another ongoing trend is toward fleet standardization. This trend is being manifested by companies looking to consolidate upfit suppliers and spec options for better pricing, interchangeability of parts, and expanded equipment standardization across the fleet. Similarly, some fleets are increasingly looking at remanufactured components.

As you can see, there’s a lot going on in the medium-duty market, which promises to make CY-2015 a very interesting year.